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Saturday, January 12, 2013

Flipkart is one of the very few online retailers in India to offer "Card on delivery" in addition to "Cash on delivery".

If users select this option at check out, they can pay up to the flipkart man (flipkart's delivery boy) using a credit or debit card. The flipkart-man will use a wireless POS terminal at delivery.

Cash on delivery with Card on Delivery option on Flipkart's checkout page

Cash on delivery is a very attractive option for Indian buyers due to the low penetration of credit cards and online banking among the general population.

Even users having credit or debit cards are reluctant to share their card details online, but are willing to swipe it at a local shop.

To cater to this audience, Flipkart had come up with the "Card on Delivery" feature.

"I've never understood how to pay by card online. The best I can do is use an ATM. I wish more websites had the cash on delivery option," says Sneha Anand, a school teacher. - HindustanTimes

As per a Nielsen survey, upto 80% of online transactions are paid for by credit or debit cards, net banking or PayPal and just 15% of deals were cash on delivery in developed markets.Flipkartstates that60%of their orders were on cash on delivery, which substantiates the Indian market for this mode of payment.

"Cash on delivery" came to be called as "Collect on Delivery" in other countries when options other than cash payment was offered to users. Flipkart prefers to call their "Collect on delivery" service as "Card on Delivery".

Online food store MyGrahak.com, which claims to be India’s largest online food store, also has this card on delivery option.

Cash on delivery is an option that is less profitable to ecommerce companies, since they incur additional charges in collecting the money and getting the money back to the company. Flipkart wouldn't have this problem since they have their very own delivery network.

Most companies that accept cash on delivery have it as a precautionary measure to call up and confirm the order with the customer before processing the order. It is assumed that Flipkart does the same to reduce the rate of rejection of the product. Indiaplaza.com states that rejection rates are as high as 45% for them. Accordingto Avendus Capital, eCommerce firms cough up Rs.35-65 more for processing every cash on delivery shipment.